Zambian economy will not collapse – Bank of Zambia

Bank of Zambia (BoZ) Governor Danny Kalyalya has ruled out the collapse of Zambian economy despite the changes that have been made to mining tax regime.

Dr. Kalyalya says the changes made to the mine tax regime which will result in the loss of K2.3 billion will not bring the country’s economy to its knees as it still has a lot of potential and room to grow.

He says this means that the Zambian economy is still resilient and will not be allowed to collapse.

The BoZ Governor has also noted the importance of realizing that the K2.3 billion revenue loss from mine tax changes is only a projection of what would have been realized.

He says the concern of the central bank is the current situation where interest rates in the country are more flexible to adjustments upward than downward.

Dr. Kalyalya was speaking April 28th morning during a Zambia Chambers of Commerce and Industry (ZACCI) breakfast meeting held under the theme : “2015 Monitory Policy Implementation, What Should the Private Sector Expect.”

Speaking earlier at the same breakfast meeting ZACCI president Geoffrey Sakulanda had asked Dr. Kalyalya to highlight how the Central Bank will deal with the implication of the budget deficits that are expected to be incurred from the revised mining tax.

Mr. Sakulanda said the concern of ZACCI is that the budget deficit in the 2015 national budget may lead to increased borrowing by government which is also feared to further reduce the resources available for the banking sector for private sector lending.

He notes that this is particularly that when there is such increased domestic borrowing, commercial banks prefer lending to the government than the perceived high risk private sector.